Leading Republican signals green light to existing ‘inversion’ deals

The top Republican on the Senate Finance Committee on Tuesday reiterated he’s open to Congress addressing corporate tax inversions – but dismissed making any law retroactive, as Democrats want.

Sen. Orrin Hatch of Utah said the only way to “completely address” the issue of inversions – whereby a U.S. company reincorporates abroad for tax purposes – is through comprehensive tax reform. Hatch made waves when he recently said he’d be open to a short-term inversion fix. Many Republicans want to address the issue through broader tax reform and are wary of stand-alone moves.

Hatch on Tuesday said whatever approach Congress takes, “it should not be retroactive or punitive. And, it should be revenue neutral.”

That puts him at odds with Democrats, who are seeking to make anti-inversion legislation retroactive to May 2014. That date was stated to lawmakers in a letter from Treasury Secretary Jacob Lew, and reiterated at the Tuesday hearing by Robert Stack, the Treasury’s deputy assistant secretary for international tax affairs.

“Congress should pass legislation immediately with an effective date of May 2014 to prevent companies from effectively renouncing their citizenship to get out of paying taxes,” Stack testified.

Democrats, meanwhile, are keeping the heat on the issue. On Tuesday, Sen. Ron Wyden, the chairman of the finance panel, said the inversion “virus” was seemingly multiplying every few days and that lawmakers should plug the loophole now.

Proposals range from making it effectively impossible for a U.S. company to move abroad for tax-reduction purposes, to barring the award of federal contracts to companies that have reincorporated in the Cayman Islands or Bermuda.